It paid to be an early investor
Faceboook? Maybe we should call it Flopbook.
The social-networking company's market debut will long be known as one of the worst initial-public-offering fiascos ever.
Launched at an overly ambitious (some would say "greedy") price of $38 a share, Facebook started off just fine, popping to $45. Then things took a wrong turn.
Sellers drove the price back down. A Nasdaq ($COMP) trading system meltdown made it impossible for eager investors to know if they owned the stock or not, with some double- and triple-buying as a result. The stock ended its first day basically flat.
The next day, the painful slide picked up pace. Facebook (FB.O) now sells for about $27 a share, 28 per cent below the offering price.
If you were one of those "average Joe" retail investors who chased the IPO — fighting to buy close to the offering price that first day — you've taken a bath. But of course, Wall Street being Wall Street, the IPO wasn't about you.
Lots of people higher up on the food chain made big bucks on Facebook's flop. They include some you know, like a certain Mr. Zuckerberg, and some you don't. Insiders, early investors and bankers reaped the biggest gains, says Jacqueline Garner, an IPO expert and an associate professor of finance at Drexel University.
But there is some hope you may be in the winner's circle with them — at least on a small scale — if you happen to own one of the mutual funds that bought in early enough.
Click ahead for a look at the winners in Facebook's IPO flop.
* All funds in USD.
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Sept. 19 (Bloomberg) –- Bloomberg Intelligence’s Praveen Menon discusses Alibaba’s IPO and expansion plans with Matt Miller on “Street Smart.” (Source:... More Sept. 19 (Bloomberg) –- Bloomberg Intelligence’s Praveen Menon discusses Alibaba’s IPO and expansion plans with Matt Miller on “Street Smart.” (Source: Bloomberg)
Date 14-09-19, Duration 2:46, Views 460